$100 mn fundraise propels Vedantu into unicorn club

BENGALURU: Vedantu became the fifth edtech in India to attain the so-called unicorn status after the online tutoring platform raised $100 million, reflecting elevated investor interest in the edtech space following the pandemic.

Bengaluru-based Vedantu made the fundraise in a Series E round led by Singapore-based ABC World Asia. The funding round, which also saw the participation of existing investors Coatue, Tiger Global and GGV Capital, turned the startup into a unicorn or companies that are valued at at least $1 billion.

While the round is largely closed, it may see minor participation of $5-10 million from new investors, Vedantu’s chief executive Vamsi Krishna said in an interview on Wednesday.

Vedantu is the 28th Indian startup to become a unicorn in 2021. This year alone, higher learning and upskilling platforms Eruditus and Upgrad joined the country’s unicorn club. Further, companies such as Byju’s and Unacademy have almost doubled their valuations over the past year.

Vedantu plans to use the proceeds of the capital raise to double down on the kindergarten to grade 12 (K-12) learning segment, while looking to diversify its extracurricular course offerings and expand internationally. The 11-year-old startup focuses on providing live tutoring courses to students aged 3 to 18 years. It also offers test preparation for competitive exams such as IIT-JEE, National Eligibility cum Entrance Test (NEET), and school boards such as Central Board of Secondary Education of India (CBSE), Indian School Certificate Examinations (ICSE), and state exams such as Maharashtra boards.

“Even before the pandemic, Vedantu was almost doubling to tripling its (revenue) growth annually. As schools begin to open up, we continue to register threefold growth across our key metrics and feel this will sustain in the coming years as well. Further, we will continue our focus on the K-12 segment since online penetration continues to be barely 5% for this segment, leaving a large headroom to grow,” Krishna said.

The K-12 learning segment is expected to grow nearly 6.3 times and create a $1.7 billion market by 2022, according to a recent report by management consultancy Redseer and impact fund Omidyar Network India.

Krishna said the company is looking to expand its footprint overseas over the next 12 -15 months. While the plans are still early, it is actively exploring opportunities in West Asia and South-east Asia. It is also looking to make acquisitions to enhance its product portfolio and aid its global expansion.

Meanwhile, the company plans to introduce Indian language courses on its platform. Currently, almost 55-60% of revenues come from live tutoring offerings, with test preparations contributing another 30-35% of overall revenues, Krishna said.

Vedantu’s revenue jumped almost 4.5 times last year alone, as the pandemic continued to provide tailwinds to digital learning formats. The company is currently clocking $65 million in annual revenue run-rate, which it plans to more than double by next year.

“Vedantu embodies our investment themes of providing better access to quality education and using digital technology to improve lives and livelihoods. In India, online education has the potential to extend the scope of Right to Education in the underserved community,” said Sugandhi Matta, chief impact officer, ABC World Asia.

Krishna said the company will consider a public listing by 2024.